Personal Finance

How tariffs on Canada, China and Mexico may impact U.S. consumers

Published

2 months ago

January 31, 2025

Business Finance News

President Donald Trump on Jan. 27, 2025 in Doral, Florida.

Joe Raedle | Getty Images News | Getty Images

President Donald Trump has repeatedly discussed imposing tariffs, both on the campaign trail and since taking office — and the first tranche, on goods from Canada, China and Mexico will take effect Feb. 1, the White House confirmed on Friday.

While there are still some unknowns, one thing is clear, economists said: U.S. consumers should brace for a negative financial impact.

It’s “hard to find positives” from tariffs, said Mary Lovely, a senior fellow at the Peterson Institute for International Economics, whose research specializes in trade with China and global supply chains.

Trump plans to put 25% tariffs on Mexico and Canada, and a 10% duty on China, Karoline Leavitt, the White House press secretary, said Friday.

China, Mexico and Canada are the three largest trading partners with the U.S., as measured by imported goods. They respectively supplied about $536 billion, $455 billion, and $437 billion of goods to the U.S. in 2022, according to the Office of the U.S. Trade Representative.

President Trump to impose 25% tariffs on Canada and Mexico on Feb. 1

Tariffs are a tax on foreign imports. U.S. businesses pay that tax to the federal government.

Many businesses will funnel those extra costs to customers — either directly or indirectly — which is why tariffs generally trigger higher prices for consumers, economists said.

“Part of these tariffs will be passed on to consumers,” Lovely said.

Americans could also find they have fewer choices for brands and products stocked on store shelves, she said.

Exemptions may ‘limit the damage’ to consumers

There are still many question marks over the looming tariffs on Canada, China and Mexico.

For example, it’s unclear if any imports will be exempt. Trump suggested this week, for example, that Canadian oil might be exempt. The White House said the tariffs will be open for public inspection on Saturday.

Discussions around such specifics are “ongoing,” a White House official told CNBC Friday morning.

Auto stocks will be hit hard by Trump's proposed Canada & Mexico tariffs, says RBC's Tom Narayan

“There are always exemptions and carve-outs,” said Mark Zandi, chief economist at Moody’s.

Trump might try to “limit the damage to the U.S. consumer” via those exemptions, Zandi said. For example, he could choose not to impose duties on apparel from China, avocados from Mexico or cheese from Quebec, he said.

Debates about economic impact

The White House expects tariffs and Trump’s broader economic agenda to benefit the U.S. economy.

Trump imposed tariffs during his first term that — along with tax cuts, deregulation and energy policy — “resulted in historic job, wage, and investment growth with no inflation,” White House spokesman Kush Desai said in a written statement.

During his second term, Trump will use tariffs again to “usher in a new era of growth and prosperity for American industry and workers,” Desai said.

A 25% Canada-Mexico tariff and 10% China tariff would raise about $1.3 trillion in revenue through 2035 on a net basis, the Committee for a Responsible Federal Budget estimates. That revenue may be used to partially offset the cost of tax cuts, a package that might cost more than $5 trillion over 10 years.

However, a 10% additional tariff on China would shrink the U.S. economy by $55 billion during the Trump administration’s second term, assuming China retaliates with its own tariffs, according to an analysis by Warwick McKibbin and Marcus Noland, economists at the Peterson Institute for International Economics.

A 25% tariff on Mexico and Canada would cause a $200 billion reduction in U.S. gross domestic product, they found.

Meanwhile, economists expect more tariffs in the future.

On the campaign trail, Trump floated a 10% or 20% universal tariff on all imports and a tariff of at least 60% on Chinese goods, for example.

A 20% worldwide tariff and a 60% levy on Chinese goods would raise costs by $3,000 in 2025 for the average U.S. household, according to an October analysis by the Tax Policy Center.

“Broad-based, universal tariffs and the damage they will do is not really a debate,” Zandi said. “They will do damage. It’s just a question of how much and to whom.”

How tariffs may impact consumers

Consumers can pay for tariffs both directly and indirectly, economists said.

Tariffs on China would likely have such the largest direct impact on consumers — the bulk of what China exports to the U.S. is consumer goods like apparel, toys and electronics, Zandi said.

China is the “dominant supplier” of toys and sports equipment to the U.S., and provides 40% of its footwear imports, and 25% of its electronics and textiles, according to a recent analysis by PIIE economists.

Mexico and Canada tariffs would also “put upward pressure on food prices,” according to PIIE economists.

The nations are “important sources” of vegetables, accounting for 47% of total U.S. imports, and prepared foodstuffs (42%), for example. Transportation equipment and machinery, electronics and fuel are other sectors that stand to be most impacted, they found.

“The U.S. imports roughly 40% of its crude oil, with Canada as the dominant supplier,” Nigel Green, CEO of deVere Group, a financial consulting firm, said in a written statement.

“If oil is hit with tariffs, the impact could hit energy markets, pushing up costs for businesses and consumers,” Green wrote.

However, domestic energy producers, certain U.S. manufacturers and other industries “could see short-term gains from reduced competition,” he added.

Indirectly, U.S. producers might raise their prices because they face less foreign competition for certain goods, Lydia Cox, an assistant professor of economics at the University of Wisconsin-Madison, said during a recent webinar.

U.S. companies that use tariffed goods to manufacture their products might also raise prices for downstream goods, Cox said. For example, steel tariffs might lead to higher prices for cars, heavy machinery and other products that use steel.

Tariffs ‘create a lot of collateral damage’

Other nations might also respond with retaliatory tariffs that start a trade war, which might cause U.S. producers to lose sales abroad, she said.

“Unlike Canada and Mexico, for which retaliation would be inconceivable, China has retaliated in the past and would likely do so again,” PIIE economists wrote recently.

Further, tariffs may have the unintended consequence of destroying jobs, economists said.

Their ability to create U.S. jobs is “vastly, vastly overstated,” said Lovely of PIIE.

Take steel, for example. There are 80 workers in jobs in industries that use steel as an input for every one job that produces steel, Cox found in a recent paper.

Tariffs create “a lot of collateral damage along the way,” which is why economists warn against broad-based use, Cox said.

Personal Finance

Disability advocates sue Social Security and DOGE to stop service cuts

Published

16 hours ago

April 3, 2025

Business Finance News

A Social Security Administration (SSA) office in Washington, DC, March 26, 2025.

Saul Loeb | Afp | Getty Images

A group of disability advocates filed a federal lawsuit against the Social Security Administration and the so-called Department of Government Efficiency on Wednesday aimed at stopping cuts to the agency’s services.

Recent changes at the Social Security Administration under DOGE — including staff reductions, the elimination of certain offices and new requirements to seek in-person services — have made it more difficult for individuals with disabilities and older adults to access benefits, the lawsuit argues.

The complaint was filed in the U.S. District Court for the District of Columbia.

The plaintiffs include the National Federation of the Blind, the American Association of People with Disabilities, Deaf Equality, the National Committee to Preserve Social Security and Medicare, the Massachusetts Senior Action Council and individual beneficiaries.

“The defendants’ actions are an unprecedented and unconstitutional assault on Social Security benefits, concealed beneath the hollow pretense of bureaucratic ‘reform,'” the complaint states.

In nine weeks, the new administration has “upended” the agency with “sweeping and destabilizing policy changes,” the plaintiffs claim, that have shifted agency functions to local offices while slashing telephone services.

“The result is a systematic dismantling of SSA’s core functions, leaving millions of beneficiaries without the essential benefits they are legally entitled to,” the lawsuit complaint states.

The “mass restructuring” of the agency is unlawful and violates the Rehabilitation Act and the Administrative Procedure Act, the lawsuit argues. The changes also violate multiple constitutional provisions, including the First Amendment right to petition the government for redress of grievances, according to the plaintiffs.

With 1.1 million disability claims pending, the recent actions could also be life threatening to individuals who are dying or going bankrupt while waiting for decisions, they allege.

The Social Security Administration did not respond to CNBC’s request for comment.

“President Trump has made it clear he is committed to making the federal government more efficient,” White House spokesperson Liz Huston said in an email statement. “He has the authority to manage agency restructuring and workforce reductions, and the administration’s actions are fully compliant with the law.”

Lawsuit alleges reform is ‘administrative vandalism’

People hold signs during a protest against cuts made by U.S. President Donald Trump’s administration to the Social Security Administration, in White Plains, New York, U.S., March 22, 2025.

Nathan Layne | Reuters

The Social Security Administration sends monthly checks to around 73 million Social Security and Supplemental Security Income beneficiaries.

DOGE, which is not an official government entity, has been tasked with cutting “waste, fraud and abuse” within the federal government. President Donald Trump issued an executive order creating DOGE on Jan. 20, the same day he was inaugurated.

Since then, the Social Security Administration has cut 7,000 employee positions and closed the Office of Civil Rights and Equal Opportunity and the Office of Transformation. The Office of Civil Rights and Equal Opportunity handled the agency’s equal employment opportunity and civil rights programs. The Office of Transformation was responsible for coordinating customer service-related initiatives like adding the ability to use digital signatures and electronic documents.

The Social Security Administration has also changed its identity proofing policies for claiming benefits and changing direct deposit information that is expected to require more individuals to visit the agency’s offices in person.

The agency has updated its policy, allowing individuals applying for Social Security Disability Insurance, Medicare, or Supplemental Security Income who cannot use a personal my Social Security account to complete their claim entirely over the telephone, starting April 14.

The reforms amount to the dismantling of “core functions of SSA, abandoning millions of Americans to poverty and indignity,” according to the plaintiffs’ complaint.

“What the defendants frame as ‘reform’ is, in truth, administrative vandalism,” the lawsuit states.

Beneficiaries face long waits, overpayment issues

The plaintiffs include seven individuals whose experiences, including long customer service waits and, in some cases, demands to repay large sums to the Social Security Administration, are detailed in the complaint.

One plaintiff, Treva Olivero, who has been legally blind since birth, was informed in March 2024 that she had been overpaid Social Security disability insurance benefits for five or six years, prompting the agency to demand she repay more than $100,000, according to the complaint.

Olivero’s Medicaid coverage was also terminated soon after, which left her without income and health coverage. She has since been in an “ongoing struggle” to have her disability benefits reinstated, while also facing almost $80,000 in medical debt, according to the complaint.

Fiserv CEO on the nomination to Social Security Commisioner role

Another plaintiff, Merry Schoch, who received Social Security disability insurance for many years, returned to work to help pay for large medical bills after she was hit by a waste management truck in 2022. She reported her income to the Social Security Administration, and the agency made no changes to her benefit payments, according to the complaint.

Two years later, Schoch stopped working and reported her unemployment to the Social Security Administration. In August 2024, the agency then terminated her benefits and informed Schoch that she owed $30,000 for the disability benefit payments she received while working full time, according to the complaint.

Last September, Schoch was informed she could reapply for benefits. However, she has since struggled to get in touch with the agency over the phone, online and in person.

Both Olivero and Schoch are members of the National Federation of the Blind, which is also a plaintiff.

The plaintiffs want the court to reverse the Social Security Administration’s recent reforms, including staff reductions, closures of certain offices and policies requiring in-person appointments.

Personal Finance

Amid trade turmoil, ‘you do not want to time the market’

Published

20 hours ago

April 3, 2025

Business Finance News

Pres. Trump unveils sweeping tariffs: Here's what to know

As President Donald Trump rolls out sweeping new tariffs on goods imported into the United States, Americans are growing increasingly pessimistic about their financial fate.

Consumers worry that the duties will cause inflation to flare up again, while investors fear that higher prices will mean lower profits and more pain for the battered stock market.

As of Thursday morning, futures tied to the Dow Jones Industrial Average were down 1,200 points, or 2.8%. S&P 500 futures sank 3.4%, and Nasdaq-100 futures lost 4%.

But sharp drops — or sudden spikes — in the market are to be expected, according to Jean Chatzky, CEO of HerMoney.com and host of the podcast HerMoney with Jean Chatzky.

“With these volatile markets, you do not want to time the market,” she said of the old adage. “Timing the market doesn’t work — it’s time in the market.”

Trade tensions, inflation and concerns about a possible recession have undermined consumer confidence across the board, several studies show.

Still, it’s normal for most Americans to feel unnerved during heightened volatility, Chatzky said.

“There’s very little doubt that consumers are feeling nervous, maybe more nervous than we’ve felt in quite some time,” she said.

Committing to setting money aside in a high-yield savings account, whether by scaling back on dining out or rideshare expenses, will help regain some financial control, Chatzky said.

Top-yielding online savings accounts currently pay 4.4%, on average, well beyond the savings account rates at some of the largest retail banks, which average just 0.41%.

“Taking action is the best way to feel more resilient,” she said.

It’s understandable why some may be hesitant to continue investing, however, when you are investing for the long term, a down market is an opportunity for dollar-cost averaging, which helps smooth out price fluctuations in the market, Chatzky said.

This is also a good time to check your investments to make sure you are still allocated properly and rebalance as needed, so you are not taking on more risk that you are comfortable with, she added.

Timing the market is a losing bet

Talk yourself down from making any sudden financial moves, Chatzky advised.

Trying to time the market is almost always a bad idea, other financial experts also say. That’s because it’s impossible to know when good and bad days will happen.

For example, the 10 best trading days by percentage gain for the S&P 500 over the past three decades all occurred during recessions, often in close proximity to the worst days, according to a Wells Fargo analysis published last year.

And, although stocks go up and down, the S&P 500 index has an average annualized return of around 10% over the past few decades.

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Personal Finance

How to file for a free tax extension if you can’t make April 15 deadline

Published

21 hours ago

April 3, 2025

Business Finance News

Galina Zhigalova | Moment | Getty Images

If you can’t file your taxes by the April 15 deadline, there’s a free, easy way to submit a federal tax extension online, experts say.

Nearly 1 in 3 American admit that they procrastinate when it comes filing their taxes, according to a January survey of more than 1,000 U.S. filers from IPX1031, an investment property exchange service. In addition, about 25% do not feel prepared to file their taxes, the survey found.

As of March 21, the IRS received roughly 80 million individual returns of the 140 million expected this filing season, the agency’s latest reporting shows.

Many natural disaster victims have an automatic tax extension, which varies by jurisdiction. Military members serving in a combat zone also have more time to file.

However, the federal tax deadline for the majority of taxpayers is April 15. It’s possible to push that due date to Oct. 15 by filing for an extension.

But “it’s an extension to file, not an extension to pay,” said Jo Anna Fellon, managing director at financial services firm CBIZ.

“It’s an extension to file, not an extension to pay.”

After the tax deadline, you will start incurring the failure-to-pay penalty of 0.5% of your unpaid taxes for each month or partial month that your taxes remain unpaid. The failure-to-pay penalty has a maximum charge of 25% of your unpaid taxes.

That’s cheaper than the failure-to-file penalty, which applies when you don’t submit your return by the deadline. The failure-to-file penalty is 5% of unpaid taxes monthly, also limited to 25%.

But you’ll also owe interest on your unpaid balance, which is currently 7% and accrues daily after April 15.

You can estimate your taxes owed by creating a “pro forma return” — or mock version of your filing — using as many tax forms as possible, Fellon said.

The ‘easiest way’ to file an extension

There are a few free options to file a tax extension.

For federal taxes, you can complete Form 4868 and mail it to the IRS. But it’s better to file digitally to avoid processing delays amid the agency’s shrinking workforce, experts say. Paper filing can also increase fraud risk, they say.

The “easiest way” is by choosing “extension” when making a payment for 2024, which automatically submits Form 4868, according to Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.

“It takes all of five minutes,” and you can double-check the transaction via your IRS online account, he said.

IRS Direct Pay

Internal Revenue Service

Alternatively, you can file your extension for free online via IRS Free File, a public-private partnership between the IRS and several tax software companies.

For the 2025 season, you can use IRS Free File for returns if your adjusted gross income, or AGI, was $84,000 or less in 2024. But there’s no income limit to file an extension, Lucas said.